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Thursday, August 28, 2014

Hmmm….according to leadershipng, oil giant Shell has sold
four oil fields which it operated in Nigeria, in line with its global
cost-saving initiative. Shell last year put up for sale its 30 per cent shares
in four oil blocks in the Niger Delta — Oil Mining Licence (OML) 18, 24, 25, 29
— as well as a key pipeline, the Nembe Creek Trunk Line.

“We have signed sales and purchase agreements for some of the oil mining
leases, but not all that we are seeking to divest,” a Reuters report quoted an
un-named Shell spokesman as saying.

The report however did not give details on the value of the deals signed or
when the full process would be completed. France’s Total and Italy’s Eni are
also set to raise revenue from the sale of their 10 per cent and 5 per cent
equities in the assets in which the Nigerian National Petroleum Corporation
(NNPC) holds 55 per cent on behalf of the Nigerian government.

Meanwhile, Nigeria has lost about N15 billion to the ECOWAS Trade
Liberalisation Scheme (ETLS) and Joint Committee on Commerce (JCC) with the Republic
of Benin between January and June this year, Customs area controller, Seme
Border command, Comptroller Willy Egbunin has disclosed.

The Financial Times yesterday reported that Shell is close to selling the
assets for about $5 billion (3 billion pounds) to domestic buyers.

In March, Reuters reported that Nigerian firms Taleveras and Aiteo made the
highest bid of $2.85 billion for the biggest of the four oil fields, OML 29.

Shell, along with many other oil majors, is undergoing a broad process of asset
sales across the world in an effort to cut costs and boost profits.

Other companies, including Total, Eni, Chevron and ConocoPhillips, have sought
to pull out of the oil-rich West African country which has been plagued by
rising oil spills, sabotage and industrial-scale theft from Nigerian wells and
pipelines of up to 150,000 barrels a day.

Last summer, a Shell review flagged the possibility of scaling down operations
in Nigeria and the company is now poised to sell four fields and a pipeline for
what some believe could be $5 billion.

Despite the planned disposals, however, the Anglo-Dutch group still faces legal
cases – including one at London’s high court – brought by local communities
seeking financial redress for pollution.

A company spokesman in London confirmed that an agreement on four oil-mining
leases and a pipeline had been reached, but said the process had not yet
concluded.The price tag for the full sale of all four fields and the pipeline
was estimated at $5.2 billion by two anonymous sources quoted by the FT, but
City analysts had presumed in the past that the figure would be nearer $3
billion.

Reacting to the planned sale, London-based oil analyst at Bank of Montreal,
Iain Reid, said, “If Shell can achieve this sort of price for these assets, it
will have achieved three objectives: firstly reduced its exposure to
troublesome onshore Nigeria; second cut its net capital expenditure spend; and
third increased the free cash it can spend on share buybacks and dividends, all
of which we believe the market will like.”

However, Shell would only receive a 30 per cent share of any proceeds because
it shares the ownership of the assets with the NNPC, Total of France and ENI of
Italy.

The Anglo-Dutch group, which says it has done its best to clear up pollution
and has blamed past oil spills on sabotage, has been trying to reduce its
commitment to the troubled area for years but has only now apparently found
local buyers willing to pay the prices it has been demanding.

Shell’s new Chief executive, Ben Van Beurden, who issued a profit warning
within days of taking the top job, promised to improve the financial
performance of the business through asset sales and cutbacks.

Nigeria has produced almost a quarter of a million barrels of oil equivalents a
day for Shell and at least 80,000 barrels would be lost if the four fields are
all sold.

A spokesman for the Shell Petroleum Development Company of Nigeria Ltd (SPDC)
said it would make a formal market announcement when it had successfully
completed the sales process, but stressed that the company was not abandoning
the country.“

Nigeria remains an important part of Shell’s portfolio, where we will continue
to have a significant onshore presence in oil and gas, and which has clear
growth potential, particularly in deep-water and onshore gas. Shell has a
history of over 50 years in Nigeria and remains committed to the country and to
supporting the government of Nigeria in their plans for the oil and gas
sector,” he said.